How Does Amazon Make its Money?

Most people are familiar enough with Amazon, one of the largest marketplaces on the internet that sells a plethora of items. But that’s not all the business does. It has its hand in multiple businesses and profitable ventures, creating a sustainable empire. Here’s how Amazon makes its money, along with some statistics to back those claims:

The Amazon app on a smartphone.

Retail Sales

Contrary to popular opinion, retail sales isn’t the sector in which Amazon is flourishing the way you’d imagine. The business accounts for nearly half the sales on the digital landscape and has continued to do so for several consecutive years. The problem is the loss overseas.

An Amazon delivery person on the door.

Amazon loses several billions in revenue on international sales, due to various issues involved in the transactions. Because of this reason, the company is slowly hijacking others’ products and selling them under their own umbrella, which is something to be cautious of.

Amazon Web Services

Now that the shock regarding the fact that Amazon isn’t making quite as much as you think on online sales has set in, where does it make its profits? Its online cloud services: Amazon Web Services (AWS). AWS is heavily used across various industries, with nearly 30% of cloud users working under the AWS umbrella.

More than $25 billion per year for its annual revenue, with around $12 billion a year in operational income due to the scalability of cloud platforms keeps AWS on its toes against Google Cloud and Azure.

Advertising Services

Amazon found great success in digital advertising and pushed its budget in the sector, which led to fruitful results. It experienced a huge growth of over 114% in revenue in 2018 through its advertising sector, which has only led the business to continue working for more market share. It’s expected that the company may see diminishing returns going forward, especially with how packed the market is.

Its biggest competitors are Google and Facebook, with both the companies relying heavily on suggested advertisements unlike Amazon which invests in pretty much every sector it deems worthy.

Survival on Amazon is not easy. It requires optimal techniques and strategies to stay ahead of the curve. Amazon FBA reimbursement and AI powered tools like Eva are making moves, enabling sellers to access all-in-one dashboard for success on Amazon. To learn more about how the service works, sign up for a free trial for your business today.

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